New Investor with $100k - Where would you start?
Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes
New Investor with $100k - Where would you start?
Most Popular Reply
Rental Property Investor · Philadelphia, PA · Member since 2021 · 778 posts · 503 votes
2y@Tanner Sortillo - I think I would echo some other's comments as well. I would suggest they understand various strategies/methods to invest in real estate and then let that drive their next steps as opposed to the dollar amount they have to invest. So, first question is do they want to be active or passive? If he/she wants to be active, they you have short term, mid-term, and long-term rentals in addition to fix and flips, wholesaling, etc... My suggestion would be to read 1-2 books/articles in each space and then set up conversations with 1-2 investors in each space to truly understand what skill sets, etc... would be needed in each avenue. Good Luck!
47 Replies
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Drew Sygit:
Recommend they first figure out the property Class they want to invest in, THEN figure out the corresponding location to invest in.
If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.
So, when investing in areas they don’t really know, investors should research the different property Class submarkets.
Here’s our OPINION for the Metro Detroit market (use as a template for your target area!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:
Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+ (roughly 5% probability of default), zero evictions in last 7 years.Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680 (around 10% probability of default), some blemishes, but should have no evictions in last 5 yearsClass C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.
Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560 (almost 30% probability of default), little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.
The City of Detroit has 183 Neighborhoods we’ve analyzed.
PM us if you’d like to discuss this logical approach in greater detail!
Hey Drew, thanks a lot for the in-depth class breakdown. I do think that's really important to take into account especially when looking for rental properties. Your breakdown is very clear and concise and really helpful for new investors who need to take into account neighborhood classes.
I appreciate your input again!
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Tanner Sortillo If I could house hack again I would do it in a heartbeat but my wife isn't too fond of it with a one year old! I'm an active investor so I spend the time/energy in sourcing and managing my own rentals, I am also in a very favorable location to own rentals here in Memphis so I do it myself. In my market and markets around me you can get a high quality rental for 150-300k.
Rentals aren't feasible for everyone especially if you're in a market that's super expensive and not a seasoned real estate investor this is what leads people to invest out of state passively. I work with a few hundred clients that have the money but don't have the time nor the effort to spend researching, purchasing, renovating and managing properties so that's why they reach out to me so it can be done passively. Again if you have the time and are willing to spend the effort I'd definitely do it yourself. If not there are reliable companies out there that can help.
- Lender · Nationwide · Member since 2023 · 362 posts · 237 votes2y
With 100k, I would heavily on investing in midwest markets. Prices are lower, many markets are cash flow positive, and the appreciation has been strong. I've built a 9 door portfolio there and I'm happy with my investments. Happy to connect and share details or help answer any questions.
- 2yJames WachobBusiness MemberReal Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 890 votes
Hello @Tanner Sortillo,
They could look at picking up two properties instead of just one—maybe a new construction alongside a turnkey property. This way, they can diversify their investments and spread out the risk a bit.
If they’re ready to jump in now, they might find some solid deals before the new year.
Please feel free to reach out if you have any questions.
- 2yJordan RayBusiness MemberReal Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 333 votes
Quote from @Tanner Sortillo:
I work with investors in the Phoenix market and had a conversation with a new investor the other day. He has $100k liquid set aside for investing and asked my advice on where he should start. He's comfortable waiting until the new year (post-election) or move forward now for the right deal.
I thought it was a great question and worth opening a thread to get some other opinions and input. Knowing how the market is now and where it's trending;
Where would you start and what would your approach be if you were a new investor with $100k set aside for RE investing?
Man! $100K can get you so many properties with leverage in Memphis TN! I bought a deal 2 months ago with $1100 out of my pocket and I am in the middle of the refi now! Happy to connect if your interested in Memphis TN!
Jordan Ray - eXp Realty5112 Reviews - Rental Property Investor · Member since 2019 · 411 posts · 148 votes2y
@Tanner Sortillo The number one answer is it depends on the investors goals.
How active does the investor want to be?
What returns is the investor looking for?
What is the timeline of that return?
Answers to these will get you the answer to next steps.
- Lender · United States · Member since 2020 · 1k+ posts · 499 votes2y
I think it depends on your situation and your goals. Some folks, assuming they have time and renovation experience, would use the $100k for a flip and leverage HML for the rest of the financing.
Others would use $100k down to buy a $400k property and call it a day.
It really depends on your goals and schedule.
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Henry Lazerow:
Look into a house hack. Its how I got started and allows you to buy low down 5-10% on a 2-4 unit. Great way to start!
Hey Henry, I agree I think house hacking is definitely one of the easiest and most efficient ways to get into investing! Personally, I live with my girlfriend who owns a condo in Scottsdale we'll eventually convert to a rental, so I would most likely go with a BRRRR strategy myself. However, I recommend the same thing to a lot of the investors I work with getting started!
- 2yNick HarringtonBusiness MemberReal Estate Agent · Milwaukee, WI · Member since 2019 · 31 posts · 28 votes
Hey Tanner -
This right here is the $1,000,000 question! Hard to say without knowing the full backstory of your client and what their goals are. I work with a ton of investors, and part of that means helping to identify with them what their goals are, what their risk tolerance is, and what they want this to look like long term. The main thing is understanding how does real estate fit into their entire financial picutre - do they want it to be a part of it? Or do they want it to become THE picture for their finances.
Here's a hot list of things I'd want to understand, and based on this, there are tons of different avenues he can go.
- what is his short and long term goal with real estate investing? Cash flow? Building net worth? Building capital?
- How active does he want to be in the business? Does he have time to devote 10+ hours a week? Does he want something more on autopilot that is more like 1 hour a week?
- Does he plan to keep his existing income stream, or would the goal of real estate be to significantly supplement that income?
- What is his risk tolerance?
There's tons of different ways this can go.... if he is someone that doesn't NEED the passive income, I would recommend multi-fam property w/ 25% down in a strong B or better neighborhood where he can at least break even and focus on a market with strong appreciation and rent growth. overtime, his cash flow will increase, and his net worth on paper will grow significantly.
If he is looking for cash flow, than the focus will be more on identifying neighborhoods / markets that have cash flow without too much risk to focus on that.
If he has tons of time on his hands and wants to get his hands dirty, flipping could be an option as well, with a combination of his money + private money.
Hope this helps.
Nick Harrington | Compass532 Reviews - Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 466 posts · 257 votes2y
Hi Tanner-
Great question! You are working with a new investor who has $100K to get started with real estate investing. You asked what would be the approach you recommended and where to recommend they start.
If it were an expensive area like Phoenix, I would recommend they buy a house they could live in for 2 years that would cashflow as a rental after that and move on to the next house and do the same thing. Stacking rental houses every two years using the equity built up for the next downpayment each time--ideally with duplexes.
Alternatively, they could look at a market like Lansing, MI where you can buy a duplex for around $140,000 where one side pays the expenses including the property manager and the other side is mostly profit. Buy two of those well and in a year or two get HELOCs on each and do it again.
To Your Success!
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Joseph Bui:
With 100k, I would heavily on investing in midwest markets. Prices are lower, many markets are cash flow positive, and the appreciation has been strong. I've built a 9 door portfolio there and I'm happy with my investments. Happy to connect and share details or help answer any questions.
Hey Joseph, thanks for the input! I've seen a lot of replies mentioning investing in cheaper areas, particularly the midwest. I'm from the midwest originally and currently live in Scottsdale so believe me when I say the price differences are insane! Seems like you could definitely stretch your cash further there for sure.
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Jordan Ray:
Quote from @Tanner Sortillo:
I work with investors in the Phoenix market and had a conversation with a new investor the other day. He has $100k liquid set aside for investing and asked my advice on where he should start. He's comfortable waiting until the new year (post-election) or move forward now for the right deal.
I thought it was a great question and worth opening a thread to get some other opinions and input. Knowing how the market is now and where it's trending;
Where would you start and what would your approach be if you were a new investor with $100k set aside for RE investing?
Man! $100K can get you so many properties with leverage in Memphis TN! I bought a deal 2 months ago with $1100 out of my pocket and I am in the middle of the refi now! Happy to connect if your interested in Memphis TN!
Hey Jordan, seems to be a theme of purchasing in cheaper markets! Out of curiosity, how did you manage to purchase a property with $1,100 out of pocket? Personally, I'd pay with cash or utilize hard money and obviously the market in Memphis is very different than in Phoenix, but I don't think there's any way investors could get something for that much out of pocket down here haha.
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Joseph Guzzardi Jr:
@Tanner Sortillo The number one answer is it depends on the investors goals.
How active does the investor want to be?
What returns is the investor looking for?
What is the timeline of that return?
Answers to these will get you the answer to next steps.
Hey Joseph, thanks for digging in on the question. I sent my recommendations to the investor based on his goals but more so was posing the question what your approach would be in this market if it were you with $100k liquid to invest?
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @James Wachob:
Hello @Tanner Sortillo,
They could look at picking up two properties instead of just one—maybe a new construction alongside a turnkey property. This way, they can diversify their investments and spread out the risk a bit.
If they’re ready to jump in now, they might find some solid deals before the new year.
Please feel free to reach out if you have any questions.
Hey James, thanks for the input! I like the idea of diversifying your investments!
- 2yJordan RayBusiness MemberReal Estate Agent · Memphis, TN · Member since 2023 · 642 posts · 333 votes
Quote from @Tanner Sortillo:
Quote from @Jordan Ray:
Quote from @Tanner Sortillo:
I work with investors in the Phoenix market and had a conversation with a new investor the other day. He has $100k liquid set aside for investing and asked my advice on where he should start. He's comfortable waiting until the new year (post-election) or move forward now for the right deal.
I thought it was a great question and worth opening a thread to get some other opinions and input. Knowing how the market is now and where it's trending;
Where would you start and what would your approach be if you were a new investor with $100k set aside for RE investing?
Man! $100K can get you so many properties with leverage in Memphis TN! I bought a deal 2 months ago with $1100 out of my pocket and I am in the middle of the refi now! Happy to connect if your interested in Memphis TN!
Hey Jordan, seems to be a theme of purchasing in cheaper markets! Out of curiosity, how did you manage to purchase a property with $1,100 out of pocket? Personally, I'd pay with cash or utilize hard money and obviously the market in Memphis is very different than in Phoenix, but I don't think there's any way investors could get something for that much out of pocket down here haha.
Man it was a steal, got it off market from another local agent I work with that knows I buy, used Avalon Capital's hard money loan which is 100% purchase/100% Rehab. I bought it at 60% of the ARV and it was a 22K rehab. Then paid the Hard Money points using my commission and $5,000 in concessions. Guess you can say its an anomaly but good deals are out there!
Jordan Ray - eXp Realty5112 Reviews - 2yDean HarrisBusiness MemberReal Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes
Memphis, TN has some lower entry points for long term rentals. You can leverage that 100k and get sveral proeprties here that re not in "war zones".
Best of Luck!
CrestCore Realty4.713 Reviews - 2yTim JohnsonPro MemberMember since 2021 · 4 posts · 3 votes
@Tanner Sortillo
Some great advice in here!
I work with investors here in the valley, and always take a big picture view at what they have going on outside of RE investments as well.
We typically start by setting up a strategy that will maximize the tax benefits available to them so that they can continue investing/growing after the first initial purchase.
I typically talk less about the market conditions until we have a general plan in place, and then we discover what may work best with the current climate (rates, fear, opportunity, demand, etc..) - Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Nick Harrington:
Hey Tanner -
This right here is the $1,000,000 question! Hard to say without knowing the full backstory of your client and what their goals are. I work with a ton of investors, and part of that means helping to identify with them what their goals are, what their risk tolerance is, and what they want this to look like long term. The main thing is understanding how does real estate fit into their entire financial picutre - do they want it to be a part of it? Or do they want it to become THE picture for their finances.
Here's a hot list of things I'd want to understand, and based on this, there are tons of different avenues he can go.
- what is his short and long term goal with real estate investing? Cash flow? Building net worth? Building capital?
- How active does he want to be in the business? Does he have time to devote 10+ hours a week? Does he want something more on autopilot that is more like 1 hour a week?
- Does he plan to keep his existing income stream, or would the goal of real estate be to significantly supplement that income?
- What is his risk tolerance?
There's tons of different ways this can go.... if he is someone that doesn't NEED the passive income, I would recommend multi-fam property w/ 25% down in a strong B or better neighborhood where he can at least break even and focus on a market with strong appreciation and rent growth. overtime, his cash flow will increase, and his net worth on paper will grow significantly.
If he is looking for cash flow, than the focus will be more on identifying neighborhoods / markets that have cash flow without too much risk to focus on that.
If he has tons of time on his hands and wants to get his hands dirty, flipping could be an option as well, with a combination of his money + private money.
Hope this helps.Hey Nick, super great breakdown of everything. I really appreciate your input, a lot of great info I can pass on to my investors I work with as well!
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Jordan Ray:
Quote from @Tanner Sortillo:
Quote from @Jordan Ray:
Quote from @Tanner Sortillo:
I work with investors in the Phoenix market and had a conversation with a new investor the other day. He has $100k liquid set aside for investing and asked my advice on where he should start. He's comfortable waiting until the new year (post-election) or move forward now for the right deal.
I thought it was a great question and worth opening a thread to get some other opinions and input. Knowing how the market is now and where it's trending;
Where would you start and what would your approach be if you were a new investor with $100k set aside for RE investing?
Man! $100K can get you so many properties with leverage in Memphis TN! I bought a deal 2 months ago with $1100 out of my pocket and I am in the middle of the refi now! Happy to connect if your interested in Memphis TN!
Hey Jordan, seems to be a theme of purchasing in cheaper markets! Out of curiosity, how did you manage to purchase a property with $1,100 out of pocket? Personally, I'd pay with cash or utilize hard money and obviously the market in Memphis is very different than in Phoenix, but I don't think there's any way investors could get something for that much out of pocket down here haha.
Man it was a steal, got it off market from another local agent I work with that knows I buy, used Avalon Capital's hard money loan which is 100% purchase/100% Rehab. I bought it at 60% of the ARV and it was a 22K rehab. Then paid the Hard Money points using my commission and $5,000 in concessions. Guess you can say its an anomaly but good deals are out there!
Dang that's crazy, sounds like a gift from heaven haha. Thanks again for the input and the additional info on the deal!
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2y
Quote from @Jeff Roth:
Hi Tanner-
Great question! You are working with a new investor who has $100K to get started with real estate investing. You asked what would be the approach you recommended and where to recommend they start.
If it were an expensive area like Phoenix, I would recommend they buy a house they could live in for 2 years that would cashflow as a rental after that and move on to the next house and do the same thing. Stacking rental houses every two years using the equity built up for the next downpayment each time--ideally with duplexes.
Alternatively, they could look at a market like Lansing, MI where you can buy a duplex for around $140,000 where one side pays the expenses including the property manager and the other side is mostly profit. Buy two of those well and in a year or two get HELOCs on each and do it again.
To Your Success!
Hey Jeff, couldn't agree more. I think house hacking is a great point of entry for a lot of first time investors especially in more expensive areas like you mentioned. Definitely able to look into more options in the midwest from what I keep hearing. Thanks for the input!
- Real Estate Agent · Phoenix, AZ · Member since 2024 · 37 posts · 24 votes2yHey Tim, thanks for the input. I see you're one of the few local comments. I sent you over a connection request, let's stay in touch!
Quote from @Tim Johnson:
@Tanner Sortillo
Some great advice in here!
I work with investors here in the valley, and always take a big picture view at what they have going on outside of RE investments as well.
We typically start by setting up a strategy that will maximize the tax benefits available to them so that they can continue investing/growing after the first initial purchase.
I typically talk less about the market conditions until we have a general plan in place, and then we discover what may work best with the current climate (rates, fear, opportunity, demand, etc..) - Investor · Dallas, TX · Member since 2020 · 104 posts · 43 votes2y
I’d recommend starting with a property type that aligns with your long-term goals—could be cash flow or appreciation. Look into single-family rentals with strong rental demand in growing areas. If they’re really wanting to wait until after the election, I’d monitor market shifts and interest rate trends. Also, it’s best practice to consider areas with population growth and job creation- they typically offer stable returns.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.